2021
Recordkeeping Survey
Industry Snapshot
NQDC Plans
Nonqualified deferred compensation (NQDC) plans offer a tax-deferred option to supplement an existing qualified employer-sponsored plan, such as a 401(k) plan. With the NQDC comes the ability to take advantage of pre-tax deferrals, tax-deferred growth and compounded earnings.
The sponsor has two types of recordkeeper arrangements to choose from: The plan will either be bundled with the sponsor’s 401(k) provider or managed by a specialist, says Brian O’Keefe of PLANSPONSOR. “Overall, recordkeeping NQDC plans can be difficult because of the various investment strategies; eligibility and deferral tracking; different rules and regulations; and the fact that most of these plans target executives.” In addition, O’Keefe says, the number of trusted providers is limited.
The bundled-vs.-unbundled decision will determine how the request for proposals (RFP) process is done, he says. Unbundled providers typically are evaluated like other providers are but asked questions specific to the NQDC market.
“In my experience,” says Stephen Mann, area senior vice president with Gallagher Benefit Services, in Barrington Hills, Illinois, “there are several important questions to ask nonqualified recordkeepers.”
These, he says, include: Does the recordkeeper have a dedicated 409A administrative system? Can its system manage a class-year plan and/or a distribution-based plan? Can a client fund its plan with mutual funds, corporate-owned life insurance (COLI) and/or a combination of the two? Will it automatically rebalance the company’s liability allocation with the company’s asset allocation? Does the recordkeeping system allow a company to partially fund its plan or to use an asset investment lineup different from the liability investment lineup? How many consultants are dedicated to the nonqualified platform? And does the recordkeeper provide accounting, compliance and funding services? —PS
Total assets
Total plans
Total participants
11,167
780,004
$175B
Total assets
Total plans
Total participants
11,167
780,004
$175B
Total assets
Total plans
Total participants
11,167
780,004
$175B
Total assets
Total plans
Total participants
11,167
780,004
$175B
